As one of the emerging ‘tiger economies’, of Asia, India has long enjoyed rapid growth.
11 February 2015, 9:00AM - 10:00AM, GMT
As one of the emerging ‘tiger economies’, of Asia, India has long enjoyed rapid growth. However, the global downturn left its mark on India’s economic progress and the past several years have seen increased dissatisfaction within the country due to complex bureaucracy, inconsistent tax laws, infrastructure problems and other factors that impede job creation and economic growth. Over the last few years, India has slipped down the list of priority investment areas for a number of global chemical companies.
New government leadership under Prime Minister Narendra Modi has promised a pro-business approach to address these issues. At the same time, a number of Indian petrochemical companies are making a move to increase their capacities and market share. Together, these two developments promise significant changes for a chemical industry serving markets in the world’s largest democracy.
On the surface, India has all the requisite ingredients for a robust, high-growth chemical industry – the same ingredients that continue to drive chemical industry growth in China, including a large and growing population, mass urbanization and a rapidly expanding middle class supporting numerous consumer markets. For too long, however, development of the Indian chemical industry has failed to realize its potential, held back by a multitude of issues, including feedstock constraints, poor infrastructure, rampant bureaucracy and a highly complex legal, tax and regulatory regime. These impediments seem to have frustrated not just overseas investors but also Indian chemical companies themselves. The result has been a significant decline in prominence and importance for India in chemical company boardrooms around the world.
With the new government comes new hope and the early signs are positive. If the new government can follow through on its commitments to foster a more business-friendly environment, the chemical industry can help serve as the foundation for further development of the country’s industrial manufacturing value chain. Indeed, we may start to see the Indian chemical industry re-establishing its position as an engine of growth for the global chemical industry. Only those Petchem players (India or global) will win, who are able to develop the identified core business capabilities specific to Petchem and the fast-changing landscape.
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